80 straight months of job gains.
The US non farm payroll has increased for 80 consecutive months. Tomorrow it is expected to make that number 81.
- The average gain over the 80 months is 197K.
- The average over the last 12 months is 189K
- The average over the last 3 months is 121K. That is the lowest 3 month average since June 2012 (5 years ago).
So is that a concern?
Not really.
The unemployment rate back in June 2012 was at 8.2%. The rate now is 4.3%. As the unemployment rate goes lower, and you move toward full employment, the gains in employment become harder and harder to be sustained. As a result, the 121K three-month average at 4.3% unemployment rates is better than 121K in 2012 when unemployment rate was at 8.2%.
The expectation for tomorrow is for the US to add 178K jobs. That is stronger than the 138K in May. A number like that (or really most anything positive), would probably not deter the Fed from their planned path. The Fed is expecting to raise rates 1 more time in 2017 and also start a modest roll off the QE purchases starting in September.
The biggest surprise now would be if there was a oversized gain in jobs, along with a run up in the average earnings (say up to 2.8% or above).
Other details:
- US unemployment rate is expected to remain unchanged at 4.3%. That is the lowest since May 2001
- The average hourly earnings are expected to rise by 0.3% MoM. The YoY is expected to rise by 2.6% vs 2.5%.
- The change in Manufacturing is expected to show a 5 K increase vs -1K in May.
- The underemployment rate came in at 8.4% last month. That was the lowest since September 2007 - before the start of the recession (see chart below). There is no expectations. Although not making at the lowest level since 2001 like the unemployment rate, a move below the 7.9% and we will be talking about it.
The employment report will be released at 8:30 AM ET/1230 GMT tomorrow.